OBAMA'S MISERY INDEX

John Ransom

To give you an idea how bad the jobs report released on Friday is, consider this fact: The employment situation in the country is so bad that economists can’t accurately measure it with the existing tools they use to measure jobs. In other words, we have entered a period in our country not contemplated by economists. They simply don’t have the tools to measure what’s actually occurring in the jobs market.

Modern economists never imagined a scenario in which a country with as much wealth, power and innovation as United States could stretch out a jobs recession as long as the country has under Obama.

Economists please meet Barack Hussein Obama, record-setter. More debt, more spending, more regulation than ever before- and fewer jobs.

We have a record amount of money in the system doing a record amount of nothing right now. And still the government policy wonks keep thinking that by injecting more money into a system already over-burdened by its money supply we will eventually get different results.

Only Obama could preside over an economy with so much money that has produced so little return as our economy has since January 2009.

Never in the annals of human history have so many dollars done so little for so many.

Yet the Obamunists keep calling for more money and more regulations.

The result is that investors today are still buying US Treasuries despite the fact that after calculating for the real inflation rate Treasury bonds are delivering net negative returns. In other words, investors choose to park money someplace where they are guaranteed to lose money. Because with Treasuries at least they know that their losses will be limited. If they invest in expanding businesses, they know they could lose their entire vig to the G-Men.

This phenomenon, where investors would rather have losses than any risk, has an effect on jobs.

As most of the commentariat is noting, the top-line unemployment number- the one that makes all the headlines- is going down not because of an improving jobs market, but rather because people are dropping out of the workforce at a record pace.

The 8.1 percent unemployment number is meaningless. It actually doesn’t exist. It’s like measuring an 8 foot board with a 12 inch ruler. Shortening the ruler doesn’t make the board smaller.

The rate at which Americans are participating in the jobs market is now 63.5 percent. More than one-third of Americans qualified to work have despaired of ever finding a job under Obama. That’s the highest number of Americans who have sat on the sidelines rather than look for work since 1981. For over a year the workforce participation rates have plunged, coinciding with expiring unemployment benefits.

And the problem is not that there is a lack of money in the system to sustain the economy. But there is a notable lack of demand. Demand comes from confidence that consumers and business feel about the health of the economy. Unlike politicians, those of us in the real world can’t spend what we don’t have. We have to manage our lives using the cash that we actually have at hand.

The problem here is not that businesses and banks don’t have money. Currently the money supply (MZM) stands at a record $11 trillion. Yet the velocity at which the money has moved through the system has plunged under Obama. Money is sitting in accounts, not contributing to GDP growth, but rather just chasing the price of hard assets up because people who make decisions fear that the worst in the economy is yet to come.

Obamacare, Dodd-Frank, Sarbanes-Oxley, TARP, public pensions, John Corzine, Solydnra and the UAW have done a fantastic job of muddying the waters for corporate America as well as small business owners and the self-employed.

These hostile acts taken by or on behalf of Big Government have our economy idling in place.

Economic conditions are so bad that the standard tools used by economists to explain current conditions can’t measure the depth of the peoples’- or the economy’s- depression. Jimmy Carter had the Misery Index. People, meet the President of the United States: Barack Hussien Obama.

The Obama Index is the new index for measuring our despair.

Courtesy of Jonathan Garthwaite @ Townhall.com

The Consequences of Obama's Bungled Mideast Policy

Michael Barone

In Libya, U.S. Ambassador Christopher Stevens and three colleagues were murdered Tuesday. Earlier that day, protesters in Egypt stormed the U.S. embassy and tore down the American flag.

It was "the day the roof fell in," proclaimed blogger and historian Walter Russell Mead. Barack Obama's "efforts to reconcile the U.S. and moderate Islamism -- in part by distancing the U.S. from Israel -- have angered Israel without reducing Islamist bitterness against the United States."

In other words, his Middle East policies are in shambles. His assumption that a president "who doesn't look like other presidents" would endear America to Arabs has been proven unfounded.

So have other assumptions. Like the idea that Iran's mullah regime would negotiate with us if we uttered soothing words and turned a cold eye on Iranian dissidents, as Obama did in June 2009.

And the idea that creating distance between the United States and Israel would lead to a settlement between Israelis and Palestinians.

Obama came to office believing that America had a lot to apologize for. For the "tension" between the U.S. and the Muslim world that "has been fed" by colonialism and the Cold War, as he said in his June 2009 "New Beginning" speech in Cairo.

There, he implicitly contrasted George W. Bush's emphasis on universal human rights by admitting that "America does not presume to know what is best for everyone."

Since the 9/11/12 attacks on America, Muslims have been protesting over much of the world, from Tunisia to Yemen to Bangladesh, and in some cases, have been assaulting our embassies.

The ostensible reason for the protests is a video produced by someone in the United States criticizing the Prophet Muhammad. But that's obviously just a pretext, used by Islamist terrorist organizers to whip up frenzy in nations with large numbers of angry unemployed young men.

Unfortunately, some of our government officials have taken the complaints about the video seriously. Before the attack, the Cairo embassy issued a statement condemning "the continuing efforts by misguided individuals to hurt the religious feelings of Muslims."

When Mitt Romney condemned that statement, he was widely criticized by mainstream media. But his judgment was confirmed when Hillary Clinton and Barack Obama ordered the statement taken down.

Even so, White House press secretary Jay Carney said the protests were directed at the video rather than the United States -- wishful thinking. The Hollywood Reporter revealed that the FBI was sent to Los Angeles to track down the video maker. The Los Angeles Times reported that the State Department asked YouTube whether the offending video violated its terms of service.

As Fox News commentator Kirsten Powers wrote, "Our leaders shouldn't let our enemies know that when they kill our people and attack our embassies that the U.S. government will act like a battered wife making excuses for her psychotic husband."

It's also disturbing that Obama, after his brief statement deploring the Benghazi murders (and not mentioning the attack on the Cairo embassy), immediately embarked on a four-hour plane ride to campaign in Las Vegas.

In an interview there with Telemundo, Obama said Egypt was neither an ally nor an enemy. Later, the State Department spokesman conceded that Egypt is officially an ally under a 1989 law.

That's an unforced error for an incumbent president, one who has criticized his opponent's lack of foreign policy experience.

But perhaps it's not surprising. American Enterprise Institute's Marc Thiessen revealed last week that Obama has skipped more than half of his daily intelligence briefings. He reads the reports instead. His last in-person briefing before 9/11/12 was on Sept. 5.

It's not clear why security efforts failed in Benghazi and the Libyan government's assurances that it will protect our diplomats in the future seems sincere.

And Obama did find time for a reportedly "tense" phone conversation with Egyptian President Mohammed Morsi, who then made a public statement denouncing the attacks. But on the phone, Morsi reportedly asked Obama to "put an end to such behavior" -- i.e., suppress the video. Did the president explain that we have a First Amendment that prevents government from doing such things?

Under settled principles of international law, attacks on diplomats by, or permitted by, governments can be considered acts of war. The threat of such attacks deserves a more stern response than a campaign trip to Vegas, a misstatement of settled policy and skipped intelligence briefings.

Michael Barone, senior political analyst for The Washington Examiner (www.washingtonexaminer.com), is a resident fellow at the American Enterprise Institute, a Fox News Channel contributor and a co-author of The Almanac of American Politics.

 

Courtesy of Jonathan Garthwaite @ Townhall.com

Spending Cuts and Tax Cuts Should Be an All-of-the-Above Option, Not an Either-Or Choice

Daniel J. Mitchell

I’m in Slovenia where I just finished indoctrinating educating a bunch of students on the importance of Mitchell’s Golden Rule as a means of restraining the burden of government spending.

And I emphasized that the fiscal problem in Europe is the size of government, not the fact that nations are having a hard time borrowing money. As explained in this video, spending is the disease and deficits are one of the symptoms.

This is also an issue in the United States, and Steve Moore of the Wall Street Journal is worried that the GOP ticket is debt-obsessed and doesn’t have sufficient enthusiasm for lower tax rates and tax reform.

Stylistically, Paul Ryan’s Republican convention speech last night was a grand slam. …But was it the growth message that supply-siders wanted to hear, or debt-clock obsession? There were clearly apocalyptic claims. “Before the math and the momentum overwhelm us all, we are going to solve this nation’s economic problems,” said Mr. Ryan in reference to the federal rea ink. “I’m going to level with you; we don’t have that much time.” …In fact, he talked about turning around the economy with “tax fairness.” Ugh, that’s an Obama term. …Larry Kudlow of CNBC and a former Reagan economist tells me, “Paul’s speech just didn’t have the growth, tax-cutting message. We didn’t even get the words tax reform. I don’t know what happened, but it worries me.” It’s a question of priorities. Are Mitt Romney and Paul Ryan signaling that they will put spending cuts ahead of pro-growth tax-rate cuts?

I share Steve’s concern, but with a twist.

I’m not worried that the Republicans will put spending cuts ahead of tax cuts. I’m worried that they won’t do spending cuts at all (even using the dishonest DC definition) and therefore wind up getting seduced into some sort of tax-increase deal that facilitates bigger government.

As a general rule, it is always good to do spending cuts (however defined). And it is always good to lower tax rates. And if you can do both at the same time, even better.

But since I have low expectations, I’ll be delighted if we “merely” manage to get entitlement reform during a Romney-Ryan Administration. That would mean some progress on the spending side and presumably reduce the risk of bad things (like a VAT!) on the revenue side.

Almost All Nations Are Heading for Collapse, but Greece Is Special (in a Bad Way)

I wrote yesterday that the United Kingdom is doomed because there isn’t a political party with the vision or courage to restrain the welfare state.

At various points, I’ve also expressed pessimism about the future of France, Germany, Italy, Spain, Ireland, and even the United States.

Simply stated, almost all western nations suffer from the same toxic combination of dependency, demographic decline, and poorly structured entitlement programs.

But some nations are heading in the wrong direction more rapidly than others, and Greece is best example (perhaps I should say worst example?) of a country that is careening toward catastrophe.

It’s such a basket case that I’m not sure whether the politicians or the people deserve the lion’s share of the blame.

• The politicians deserve blame because they treat public office as a tool for self-enrichment and self-aggrandizement, largely by steering taxpayer money to friends, cronies, contributors, and supporters. Sometimes they do this in a search for votes. Sometimes in a search for cash.
• The people deserve blame because they view the state as a magical source of freebies and they see no economic or moral problem with using a coercive government to steal from fellow citizens. They realize the system is corrupt, which is why they seek to evade taxes, but that doesn’t stop them from trying to live at the expense of others.

In a best-case scenario, this type of dysfunctional system reduces prosperity. But when the number of people mooching off the state reaches a critical mass (as illustrated by these two cartoons), then you get societal meltdown.

Which is a good description of what’s happening in Greece.

And even when the government is on the verge of collapse and there’s pressure for reform, the political elite somehow figure out how to screw things up.

The latest example is the possible creation of “special economic zones.” When I first glanced at the story excerpted below, I thought this meant the Greek government was going to create something akin to “enterprise zones” featuring lower tax rates and less red tape.

Because I’m a supporter of the law applying equally to everybody, I’m not a big fan of such policies. I want to reduce the burden of government, of course, but I want that approach for entire countries, not just a handful of areas selected by politicians.

But at least the concept is good, right?

Not when Greek politicians are involved. They have taken the worst features of enterprise zones and combined them with the worst features of redistributionism. Here’s some of the story from Ekathimerini.

The government is paving the way for negotiations with the European Commission regarding the creation of special economic zones (SEZ) in Greece, Development Minister Costis Hatzidakis confirmed on Tuesday in Athens. …“SEZ will give a boost to the basis of the real economy,” said Hatzidakis, reiterating that the existing labor legislation will be fully respected. ..This forms part of the 10-point priority plan Hatzidakis announced yesterday aimed at boosting growth. Changes to the investment incentives law and the fast-track regulations will be completed within the next 15 days. The bill to be prepared will include subsidies of up to 80 percent for smaller companies… Public-private partnerships will be used for bolstering regional growth.

So the zones will keep all the bad labor laws, but provide big subsidies and create “public-private partnerships” (i.e., cronyism).

I hate to sound negative all the time, but that sounds precisely like the kind of nonsense that put Greece in a ditch to begin with.

To be fair, the article does talk about targeted tax relief and accelerated procedures for dealing with red tape. But that’s not exactly good news. Targeted tax cuts are a form of discrimination and they create an environment favorable to lobbying and corruption. And while it seems like good news to approve licenses more quickly, why not just get rid of bureaucratic hurdles? After all, this is the country (this is not a joke) that requires stool samples from entrepreneurs seeking to set up online companies.

It’s very hard to have any optimism after reading this type of story. Greece surely is an example of statism run amok, but let’s return to the point I made above about almost all other western nations heading in the same direction. Greece may be closest to the fiscal cliff, but the rest of us are driving in the same direction.

And if you think this is overheated rhetoric (yes, I’m prone to hyperbole), check out these dismal numbers from the Bank for International Settlements and the Organization for Economic Cooperation and Development.

P.S. The BIS and OECD numbers show that the United States is in worse shape – in the long run – than every European welfare state. I assume this is largely based on assumptions of health care spending rising more rapidly in America. The bad news is that this is a reasonable assumption (thanks to our third-party payer problem). The good news is that we can easily solve the problem with a combination of entitlement reform (which deals with a direct cause of third-party payer) and tax reform (which deals with an indirect cause of third-party payer).

 

 

 

Daniel J. Mitchell is a top expert on tax reform and supply-side tax policy at the Cato Institute.

 

Courtesy of Jonathan Garthwaite @ Townhall.com